Dynamic Seigniorage Theory: An Exploration

Maurice Obstfeld

No 233606, Center for International and Development Economics Research (CIDER) Working Papers from University of California-Berkeley, Department of Economics

Abstract: This paper develops a dynamic model of seigniorage in which economies' equilibrium paths reflect the ongoing strategic interaction between an optimizing government and a rational public. The model extends existing positive models of monetary policy and inflation by explicitly incorporating the intertemporal linkages among budget deficits, debt, and inflation. A central finding is that the public's rational responses to government policies may well create incentives for the government to reduce inflation and the public debt over time. A sufficiently myopic government may, however, provoke a rising equilibrium path of inflation and public debt.

Keywords: Research; and; Development/Tech; Change/Emerging; Technologies (search for similar items in EconPapers)
Pages: 55
Date: 1997-03
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Citations: View citations in EconPapers (12)

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Related works:
Working Paper: Dynamic Seigniorage Theory: An Exploration (1997)
Working Paper: Dynamic Seigniorage Theory: An Exploration (1991)
Working Paper: Dynamic Seigniorage Theory: An Exploration (1989)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:ucbewp:233606

DOI: 10.22004/ag.econ.233606

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